By: Nic Haralambous
“Bootstrapping your idea” is a series of 6 articles by serial entrepreneur and LifeCheq client Nic Haralambous. Nic has to date started 8 separate businesses, including a social network, a campus newspaper, a retail fashion company and, at one point, a rock band. In this amusing and insightful series, written exclusively for LifeCheq, he shares the most important lessons he has taken away from both his successes and failures. A must-read for the aspirant entrepreneur, or anyone who wants to take their passion project to the next level.
Having an idea is not even close to the first step when starting a business. The idea is the seed that germinates the roots that start to grow your business… maybe.
Once you’ve had your world-changing idea the next part is often the tough part: the very first step.
As I see it, the first steps you can make when starting a business can be broken down into two different ideals.
The first is the “Hack and Bootstrap” method. The second is the “Formal Set Up and Go” model.
The Hack and Bootstrap Business
For this business building methodology it’s important to remember that the goal is often to get up, set up and sell as quickly as possible.
To run a bootstrapped and hacked together business requires very little. You need a product and you need to sell it.
Here are the things you do not need when starting a tiny one person business with no sales:
- A logo
- A fancy website
- A vision / mission
- A business plan
- A dedicated landline
- A personalised email address
- Business cards
The above requirements will only delay you from the work that matters. To run a newly born business, what you need is a product that is ready to go to market and the time to sell that product.
You might be reading this and thinking that you are different; your business needs an expensive logo and a refined brand identity and business cards – dammit, everyone needs business cards. No. No they don’t. If you are starting an e-commerce website, sure you need to set up a place to sell your product, a payment provider and some logistics options that allow you to deliver your product when you sell it, but don’t let these things bog you down. They don’t need to be perfect.
In the initial stages of a business, the quote “done is better than perfect” is absolutely applicable in your day-to-day workings.
When you are bootstrapping a business, the number one thing you need is time to sell.
I believe that this is the most important thing that you need because your small business cannot exist without sales.
Many would argue that once you have sales you need to have an invoicing platform like Harvest, or accounting software like Xero to manage your business. This is true at some stage, but in the very beginning you can use Google Docs templates to produce invoices to send to your customers. You don’t have to worry about scaling this: when you need to and can afford to, you can set up Xero accounting and use it to do everything. Just start selling. Don’t make invoicing a barrier to selling.
Once you have made sales and you believe there is a real business in front of you, there will be a moment when you will actually need a few tools to run your business.
Accounting software really does matter. Every business needs to keep track of sales, income, expenses and cashflow. Xero does all of this and more. It’s also a very affordable option for small businesses.
For invoicing and time tracking, Harvest is a great tool that lets you get up and running quickly, adding clients and sending invoices. It also helps you with time tracking if you are a freelancer charging by the hour.
Google Docs is the ideal free tool for any startup hacking away to build a sustainable business. I use Google for absolutely everything: email, word processing, presentations, spreadsheets, sharing ideas with clients, managing my files and even design and pdf creation. I don’t believe that you need to pay for Microsoft’s suite of products when there is a great free alternative that is available in the cloud and accessible from anywhere. The great thing about using Google for your business is that you can upgrade your account to a business account and scale as you grow.
Database retention is a massive part of growing a small business. You need to give people great service, ask them to join your community (email list) and then engage them with relevant information and offers. A simple and initially free software option is Mailchimp which allows you to gather email addresses and send bulk emails with ease and style.
If your business is online or e-commerce focused then there are a whole host of other things to consider like the best payment platform, e-commerce technology, real-time chat for your website, analytics, heat mapping and tracking software as well as email tools that help convert more customers.
Don’t forget that your core focus as a hacking and bootstrapped business is to make sales and gain customers. Anything that gets in the way of this should be parked until you have proven that the market you are selling to actually wants the product you are selling. Once you have this endorsement from the market you can start considering the rest. It may take you a few days or a few months (sometimes longer) but if you get distracted with things that aren’t core to growing your business bottom line, then you will never become a sustainable operation.
The Formal Set Up and Go Business
If you are serious about your business and product and are confident that there is a market validation, then you are probably going to be looking to set up a proper entity. This can become costly and take some time so be prepared to spend some money and use your time to get this done.
You are going to need some very basic things if you want to start your business off in the formal way.
You need to register a company. This can be done at the CIPC and they can assist you with a memorandum of incorporation (MOI). This is important because you are going to need an MOI as proof that you exist in the world as a business when you are registering a bank account, are signing a lease or taking out a loan if you ever need to.
It’s also possible to ask your lawyer or accountant to assist with this but then expect to pay a little bit more for their time.
I suggest making digital copies of your identification document, proof of residence and any other documentation you will be required to present frequently. This will help you along the way.
Next you’re going to need a business bank account. You can’t open this up until you’ve registered a company, so make sure you do this in sequential order.
A business bank account can take weeks to set up because the banking system is slow and unresponsive in SA. Bear with it, get it done and thank me later.
If you are raising money or bringing partners into your business early on then you are going to need a shareholders agreement. My suggestion is to create a shared document that all parties can access and contribute to. Once you have a plain language version of the terms of the shareholding, send that off to a lawyer and make it formal.
Now that you have most of the documents out of the way, a business set up and a bank account, you can get serious about your company.
You’re going to need a slick website, proper logo, team photographs and a real vision, mission statement and business plan. I don’t suggest making any of these things overly complex or expensive endeavors as they can and will change over time. Focus your time and attention on getting things done while you continue to sell your product and build your brand.
These things may seem silly but if you are bringing on investors at an early stage they want to know you are the real deal.
Running your business is much easier when you have all the nuts and bolts ready to screw in as you assemble things. It also makes sense to focus on the things you are good at and use great people and tools to manage the things you are not good at.
If you like marketing, are good at sales and social media then focus on those things while you employ a temporary accountant to set up Xero and your invoicing. Make sure that you are spending your time in the best way possible for as long as possible. If you get bogged down in the things you hate then you will end up hating the things you do. That’s not a great place to be when you’re starting something that should be fun, exciting and hold great potential, like a business.
TOOLS TO GET STARTED
- Mailchimp.com for email newsletters – a must have to build a community and database.
- Conversion.com for drip email campaigns – engage your customers using the receipts they receive after purchasing from you.
- Xero.com for simple accounting and invoicing – Xero helps you start things and scale things in your business.
- Shopify.com for e-commerce – if you are selling anything online, Shopify is the go-to simple solution to test things out at affordable rates.
- Basecamp.com for project management – if you want to streamline how your small team works then Basecamp is a great tool.
- Google Docs – a free alternative to the expensive Microsoft Office products.
- Gmail for simple email – you can use your domain name (like nicharry.com) and Google’s email product will help you have firstname.lastname@example.org type emails at affordable per-user pricing.
- Squarespace.com for simple websites – if you need a professional website that’s easy to set up then Squarespace is the place to go.
- Trello.com if you need a company-wide to do list – Trello helps you keep your list of to do’s in check and visible to the entire company.
- Genius Scan App to help you save your receipts – you’re going to want to expense business-related spending and the easiest way to do this is an app on your phone. I use Genius Scan for Android and it’s a life-saver for accounting admin.
- Slack for communication – sure you can use Whatsapp groups at the beginning of a business but as you grow you’re going to need a chat app that allows you to send files and build a business. Slack is the one.